How Hospitals are Bleeding Money on Primary Care

Hospital-based primary care practices are facing financial losses, jeopardizing essential care services. This could undermine our healthcare system’s foundation that relies on primary care for preventive, diagnostic, and treatment services.

A recent report paints a stark picture, revealing that hospitals lose an average of $127,000 per year to each primary care physician. This figure climbs to a staggering $500,000 annually for some rural hospitals. This financial hemorrhaging stems from a combination of factors:

Unsustainable Reimbursement Rates: 

Insurance companies often offer significantly lower reimbursements for primary care than for specialists. This creates a financial disincentive for hospitals to invest in it, eroding its foundation.

Administrative Burdens: 

Navigating the complex medical billing and coding world consumes valuable time and resources. This administrative burden disproportionately impacts smaller practices, diverting their focus away from patient care and toward paperwork.

Shifting Patient Preferences: 

The landscape of patient preferences is changing. Many patients now choose the convenience of urgent care centers and retail clinics for their primary care needs, further constricting hospital-based practices’ already limited revenue streams.

A System Under Strain: 

These financial losses do not exist in isolation; they cascade and impact the entire healthcare system. Hospitals grappling with mounting deficits are forced to make difficult choices: service reductions, staff cuts, and even the closure of primary care practices. This harsh reality translates to:

Limited Access to Care: 

Access to it is becoming increasingly scarce in underserved communities, mainly rural areas. This leaves patients vulnerable to delayed diagnoses and inadequate treatment for chronic diseases, exacerbating existing health disparities.

The Surge of Specialists:

When affordable primary care is unavailable, patients must seek more expensive specialists for routine care. This reliance on specialists drives up healthcare costs for everyone, creating a vicious cycle difficult to break.

Diminished Patient Experience:

Overburdened and understaffed practices often need help to give patients the personalized attention they deserve. This results in shorter appointments rushed consultations, and a less satisfying healthcare experience.

Charting a New Course: 

To address this crisis and secure the future of primary care, we must collaborate on multiple fronts:

Rethinking Reimbursement: 

Reforming payment models to ensure fair compensation for primary care physicians is crucial to incentivize hospitals to invest in this vital service.

Streamlining the Administrative Landscape: 

Simplifying the billing and coding processes would free up valuable time and resources for providers, allowing them to focus on patient care.

Embracing Innovative Models: 

Exploring and implementing innovative models like direct primary care, where patients pay a monthly membership fee for unlimited access to it, offers a promising solution for practice sustainability.

Bridging the Gap with Technology: 

Leveraging technology solutions like telehealth can improve efficiency, expand access to care, and particularly benefit patients in remote locations.


The financial crisis in hospital-based care seriously threatens our communities’ well-being. We must take concrete steps towards affordable, high-quality primary care for everyone to safeguard future generations’ health and well-being. Let us not stand by and watch it sink into oblivion. Let us instead work together to build a future where it remains the cornerstone of a healthy society.

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